CAFC Issues Precedential Ruling on Proper Analysis for Patent Term Adjustment in Double Patenting Cases

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision today in In re Cellect holding that patent term extension (PTE) and patent term adjustment (PTA) are not the same for purposes of an obviousness-type double patenting (ODP) analysis. Specifically, the court said that “ODP for a patent that has received PTA, regardless whether or not a terminal disclaimer is required or has been filed, must be based on the expiration date of the patent after PTA has been added.” The opinion was authored by Judge Lourie.

PTA is assigned to a patent due to administrative delays by the U.S. Patent and Trademark Office (USPTO), while PTE is awarded based on delays due to regulatory review. In In re Cellect, Cellect, LLC appealed from four ex parte reexamination decisions brought by Samsung that affirmed the unpatentability of various claims of four of Cellect’s U.S. patents directed to “devices (e.g., personal digital assistant devices or phones) comprising image sensors.” Each of the patents was granted PTA for USPTO delay and Cellect did not file any terminal disclaimers.

Cellect appealed first to the Patent Trial and Appeal Board (PTAB) and then to the CAFC largely based on the court’s precedent in Novartis AG v. Ezra Ventures LLC, which held that “ODP does not invalidate a validly obtained Patent Term Extension…under 35 U.S.C. § 156.” Cellect argued to the CAFC that PTA should be treated in the same way, and that the Board also erred in failing to consider the equitable concerns underlying the finding of ODP in the ex parte reexamination proceedings and in finding a substantial new question of patentability.

On the first point, the CAFC agreed with the USPTO’s argument that PTA and PTE are dealt with in different statutes and address different circumstances. The court explained:

“To say that PTA and PTE should be factored into an ODP analysis in the same manner merely because they both provide statutorily authorized time extensions that restore patent term due to various administrative delays, as Cellect argues, is an unjustified attempt to force disparate statutes into one.”

The court recounted its holding in Merck & Co. v. Hi-Tech Pharmacal Co., where a patent owner filed a terminal disclaimer to overcome an ODP rejection and subsequently was awarded PTE. The court said PTE is not foreclosed by a terminal disclaimer under the language of 35 USC § 156, which is distinct from the language of 35 USC § 154, which deals with PTA and specifically references terminal disclaimers. Together with Novartis, the CAFC said it is clear that “ODP for a patent that has received PTE should be applied based on the expiration date (adjusted to a disclaimed date if a terminal disclaimer has been filed) before the PTE is added, so long as the extended patent is otherwise valid without the extension.”

But with respect to PTA, “[t]here is nothing in the PTA statute to suggest that application of ODP to the PTA-extended patent term would be contrary to the congressional design,” wrote the court. Ultimately, Cellect should have filed terminal disclaimers, the opinion added. “Terminal disclaimers were the solution to the problems created by the multiple challenged patents. If terminal disclaimers had been filed in this case, the provisions of § 154(b)(2)(B) would have come into play.”

As to Cellect’s next argument, that the equitable concerns underlying ODP, such as gamesmanship, do not exist in this case, the CAFC agreed with the USPTO that “gamesmanship is not the only issue, and that the mere presence of an unjustified extension is sufficient for the Board to find that claims are unpatentable under ODP.” The court also noted that the non-asserted claims remain valid and are entitled to their full term, including any PTA.

Finally, addressing the Board’s finding that the ex parte reexaminations raised a substantial new question of patentability, Cellect argued that “the Board artificially created a substantial new question of patentability by second-guessing the examiner’s judgment.” But the court said Cellect’s arguments “lack merit and amount to little more than attempting to prove a negative.” Cellect did not present any evidence showing that the examiner considered ODP, and the fact that terminal disclaimers weren’t required “strongly suggests that the examiner did not consider the issue,” said the court. Cellect also tried to argue that only the adjusted portion of the patent term should be invalidated if the court chose to affirm the Board’s holding that an ODP analysis for a patent that has received PTA is based on the expiration date including PTA, but the CAFC said that argument was a) forfeited and b) “would be tantamount to granting a retroactive terminal disclaimer, tying the expiration of the later-filed claims to the earlier-filed reference claims.”

Early Reactions

Writing on the case earlier this year, Dominick Conde, Prajakta Sonalker and Taskeen Aman of Venable said “if the court affirms the Board’s decision, it would essentially be holding that absent terminal disclaimers, [ODP] can be the basis for invalidating claims irrespective of PTA. Such a ruling would leave future applicants with the only absurd choice of filing preemptive disclaimers.”

Rob Sahr of Wolf Greenfield added that the case has implications for pharmaceutical patents with Patent Term Extension (PTE) that have an earlier expiring family member due to Patent Term Adjustment. “Perhaps most concerning, the Federal Circuit denied a requested remedy for invalidation of just the adjusted patent term, shutting off a potential safety valve to maintain the validity of PTE patent claims,” Sahr said.

Saul Ewing partner Brian Landry predicted the ruling could lead to a rare grant of en banc review, with industry organizations like BIO, PhRMA, and IPO as amici. “To my mind, there is significant tension between today’s Cellect decision and Novartis v. Ezra,” Landry explained. “It’s always tough to predict whether one can pick up seven votes (out of 12 active justices), but this decision would have significant impacts on valuable patent estates, especially in the life sciences.”